Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94094
Authors: 
Loertscher, Simon
Niedermayer, Andras
Year of Publication: 
2012
Series/Report no.: 
SFB/TR 15 Discussion Paper 435
Abstract: 
This paper estimates the cost of using simple percentage fees rather than the broker optimal Bayesian mechanism, using data for real estate transactions in Boston in the mid-1990s. This counterfactual analysis shows that interme- diaries using the best percentage fee mechanisms with fees ranging from 5.4% to 7.4% achieve 85% or more of the maximum profit. With the empirically observed 6% fees intermediaries achieve at least 83% of the maximum profit and with an optimally structured linear fee, they achieve 98% or more of the maximum profit.
Subjects: 
brokers
simple mechanisms
percentage fees
real estate brokerage
JEL: 
C72
C78
L13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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